1. Negotiating the Labor Agreement
Chapter 6
Negotiating the Labor Agreement

2. Collective Bargaining: Definition
Continuing interdependent relationship that involves the exchange of commitments to resolve conflicts of interests
Conflicts concern terms and conditions of employment
Success in Collective Bargaining
Objectively
Subjectively
MGMT 523 – Chapter 6

3. Negotiation Preparation Activities
Selection of the Bargaining Team
Size
Member Qualifications
Proposal Determination and Assessment
Recent labor negotiations settled by industry competitors or other facilities
Records of previous negotiations
Analysis of grievances
MGMT 523 – Chapter 6

4. Costing Contract Proposals
Preparation of employee background data
Calculation of cents-per-hour wage increase and its roll-up effect on associated time-based benefits
The cost of some items (e.g., funeral leave) can be difficult to precisely estimate
MGMT 523 – Chapter 6

5. Effective Negotiators
Has the ability to say no effectively
Has integrity and the ability to inspire confidence
Is able to plan effectively and conduct research
Can discern bottom line interests of other party
Is even-tempered; able to tolerate ambiguity and conflict
Is an excellent communicator and listener
MGMT 523 – Chapter 6

6. Effective Negotiators (cont.)
Self-confident and pragmatic
Has good physical and mental stamina
Understands short- and long-term implications of proposals
Is willing to take calculated risks to achieve bargaining goals
Asks relevant questions and interprets other party’s responses
Has a sense of humor and uses it to relieve stress
MGMT 523 – Chapter 6

7. Bargaining Agreement Range No Settlement (Management)
The Bargaining Range
Management Proposal
Resistance Point
Initial Offer
Bargaining Agreement Range
Less
More
No Settlement (Management)
No Settlement (Union)
Target
MGMT 523 – Chapter 6

8. Bargaining Approaches
Distributive bargaining
The negotiation process is a win-lose exercise
Each party relies on its bargaining power
Mutual gain (win-win or interest-based) bargaining
Both bargaining parties seek to satisfy each party’s substantive interest
Strengthens their relationship
MGMT 523 – Chapter 6

9. Strategies and Tactics
Using persuasive arguments and objective evidence
Painting a picture of the loss or gain
Presenting a bargaining proposal in writing
Listening carefully for nonverbal cues
Use of positive reinforcement
Linking issues (packaging multiple proposals)
Matching proposals
Splitting the difference
MGMT 523 – Chapter 6

10. The Bargaining Power Model
BP = OCD/CA
Assumptions
Both parties are rational and use the same approach to the costing of proposals
Either party will accept the other party’s proposal if it costs that party more to disagree than to agree
Factors Affecting Bargaining Power
Prevailing economic conditions
Bargaining parties
Governmental interventions
MGMT 523 – Chapter 6

11. Factors Affecting Agreement and Disagreement Costs
Union
Financial Supplements
Public Aid
Management
External Competition Factors
Company-Specific Factors
Intraorganizational Bargaining
MGMT 523 – Chapter 6

12. Ethical and Legal Considerations
Immoral or Unethical Behaviors
Bribing opponents
Stealing opponents’ confidential information
Demeaning or humiliating opponents
Surreptitiously observing opponents
Self-Dealing
Conformance to Professional Standards by Negotiators
MGMT 523 – Chapter 6

13. Good Faith Bargaining
Each party must demonstrate a sincere and honest intent to reach a labor agreement and be reasonable in their bargaining positions, tactics, and activities
Totality of Conduct
Violations of Good Faith Bargaining
Types of Bargaining Issues (subjects)
MGMT 523 – Chapter 6

14. Examples of Mandatory Subjects
All wage issues (hourly, piece rate, differentials, bonuses, etc.)
Health care issues (premiums, carriers, etc.)
Retirement plans Clothing or tool allowance
Hours of work
Job issues (duties, qualifications, etc.)
Performance issues (promotion criteria, evaluation methods, etc.)
Employee testing procedures (e.g., drug test)
MGMT 523 – Chapter 6

15. Management Per Se ULPs
Refusing to meet with the union to negotiate proposals
Implementing a wage change without consulting the union (unilateral change in a mandatory item)
Reaching a bargaining impasse on a nonmandatory issue
Refusing to furnish information necessary for the union’s carry out its duty to bargain
MGMT 523 – Chapter 6

16. Union Per Se ULPs
Insisting on a closed shop or discriminatory hiring clause
Refusing to meet with a legal representative of the employer about negotiations
Refusing to negotiate a management proposal involving a mandatory subject
MGMT 523 – Chapter 6

17. Other Bad Faith Bargaining
“Pleading Poverty”
Totality of Conduct Doctrine’
Boulwarism
Surface bargaining
Dilatory tactics
Imposing unreasonable conditions
Unilateral changes
Commission of ULPs
MGMT 523 – Chapter 6

18. Managerial Rights Management Rights Reserved Rights Doctrine
The discretionary freedom of management to decide about and direct the operations of the firm
Reserved Rights Doctrine
Management retains all rights to manage the firm except those rights restricted by the terms of its labor agreement with labor
MGMT 523 – Chapter 6

19. Successor Employer Bargaining Obligations
Legal duty to bargain with an existing union if there is substantial continuity of operations
Successorship Clause
A clause requiring the present owners to obligate subsequent owners to continue the labor contract
MGMT 523 – Chapter 6

20. Bankruptcy
A bankrupt firm can abandon the terms of a labor contract if the firm:
Seeks to make a fact-based proposal to the union to modify the contract
Provides relevant information to the union
Bargains in good faith
Needs to modify the contract to reorganize the firm and treats all parties fairly
Has a balance of equities favoring modification of the contract
MGMT 523 – Chapter 6

21. Violations of the Duty to Bargain in Good Faith
Legal Remedies
A cease-and-desist order that halts further ULPs
A requirement to post written notices of employee basic rights and pledge to cease ULPs
Require employer to take affirmative actions that restore employees’ rights and remove the effects of past practices
MGMT 523 – Chapter 6